The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced significant changes. Notably, the income tax exemption limit has been raised to Rs 12 lakh under the new tax regime. This aims to boost household consumption and savings.
For senior citizens, the budget introduced some key enhancements to lessen their tax liabilities. The Finance Minister announced measures to simplify TDS (Tax Deducted at Source) compliance requirements.
For senior citizens who invest in fixed deposits, interest income earned by them beyond Rs 50,000 attracts TDS at 10% rate, but now that threshold has been increased to Rs 1 lakh from FY 2025-26. This would give big relief to elderly who were investing in guaranteed return schemes like fixed deposits and were dependent on the returns.
Budget 2025 also raised the annual TDS limit on rent from Rs 2.40 lakh to Rs 6 lakh per year, significantly reducing TDS transactions for those receiving modest rental income. Earlier, tenants would deduct TDS at 10 per cent rate before transferring the rent to their landlords. Many senior citizens depend on rental income after their retirement. These budget announcements will mean better cashflows for such individuals.
Adhil Shetty, CEO, BankBazaar.com, said, “The Union Budget 2025 has brought meaningful relief for senior citizens enhancing their financial security. The pre-budget ask was to put more money into the hands of taxpayers to boost economic sentiment and consumption, which the announcements should achieve. The doubling of the TDS threshold on interest income to Rs 1 lakh and the hike in rental income limits to Rs 6 lakh will ease cash flow constraints, ensuring more money stays in their hands.”
Harsh Bhuta, Partner, Bhuta Shah and Co LLP, said the proposed changes in TDS and TCS under the Finance Bill, 2025, mark a significant shift towards a more streamlined and taxpayer-friendly regime. “The removal of TCS on educational remittances alleviates financial strain on parents and students, ensuring seamless fund transfers without the hassle of reclaiming tax credits. Increasing TDS thresholds for interest (doubled for senior citizens), dividends (doubled), and rent (enhanced from 2.4L p.a to 6L p.a) simplifies compliance, benefiting small investors, senior citizens, and landlords by improving cash flow and reducing unnecessary deductions,” he added.
One of the key announcements for senior citizens was tax benefits up to income of Rs 12 lakh as it would mean more money in their hands. Also, the exemption on the National Savings Scheme withdrawals was a big step in making sure senior citizens earn more rental income without worrying for tax liability.
Shetty added, “Tax exemption on National Savings Scheme withdrawals encourages long-term savings without the fear of tax erosion. Most notably, raising the income tax exemption limit to Rs 12 lakh with rising living costs offers substantial relief amid inflationary pressures. These measures signal a broader intent to boost consumption, encourage savings, and provide stability during economic uncertainties.”
The budget introduced several significant changes for India’s elderly. These changes will ensure senior citizens not only save more money but make them eligible to invest in different asset classes and earn more to ensure they sustain without worrying about financial burden.